In the midst of the Coronavirus pandemic, the U.S. has experienced a severe economic downturn that has hit communities and businesses hard across the country. Stay-at-home orders and social distancing guidelines have forced many small businesses to close their doors temporarily and, in some cases, permanently. There have been employee layoffs. In the wake of these difficult economic times, the federal government passed the CARES Act. It is, essentially a stimulus plan focused on getting the country, including small businesses, back on track. If you are a small business owner, now is the time to learn about what the Coronavirus stimulus plan has to offer you.
The Small Business Loan Under the Coronavirus Stimulus Plan
A major part of the Coronavirus stimulus plan launched by the federal government back in March is the Paycheck Protection Program. This program is a $350 million fund for direct business loans. In an attempt to slow the need for small businesses to lay off employees, the program provides low-interest loans of up to $10 million dollars per business to cover payroll demands while Coronavirus social distancing orders are in place.
These loans are intended to cover up to two months of a business’s average payroll costs as well as up to 25 percent of operating costs, which includes things like rent and utilities. The low-interest loans have a maturity of two years with an interest rate of one percent. If the business uses at least 75% of the loan for payroll costs, then the government will forgive the full loan amount. Should less than 75% be used for payroll costs, the loan may still be partially forgiven. If the business makes layoffs or reduces employee pay, then the full amount of the loan, at a minimum, must be repaid. You will not need to make payments on the loan for six months.
Small businesses with less than 500 employees are eligible for the Payment Protection Program. This includes nonprofits, self-employed individuals, independent contractors, sole proprietorships, and veteran organizations impacted by the Coronavirus pandemic. IN order to apply, small businesses can go through lenders approved by the Small Business Administration. You can check about which lenders are participating in your state by checking the SBA website.
Texas Business Law Attorney
At this time of economic difficulty, small businesses can greatly benefit from knowing the aid that is being made available to them. Things like the Paycheck Protection Program can provide a huge amount of support to small businesses in need. The Kumar Law Firm is dedicated to providing legal support to small business owners. We are committed to helping small businesses succeed during the highs and lows of the economy. This includes providing you with answers and trusted legal counsel on federal aid programs available to you at this time. Contact us today.